Jefferies Reaffirms Buy Rating on AppLovin (APP)

Jefferies stands by its Buy rating for AppLovin (NASDAQ: APP). They are now expecting its price may rise to $760. The decision, announced on September 23, reflects growing confidence in AppLovin. 

AppLovin has a high capacity for global expansion. This smart stock can easily attract high-value advertisers from all around the world. Its rating aligns with the broader analysts’ optimism. It also stands out for its aggressive valuation. 

Advertiser Momentum Signals Market Trust

Jefferies’ rating is grounded in direct feedback from Tierra Agency, a major advertising partner. According to the firm, “Tierra Agency expects its clients to spend between $3 million and $5 million monthly on AppLovin Corporation.”

This level of spending is comparable to what Tierra clients allocate to Meta, which ranges from $4 million to $5 million monthly. The parity in ad budgets suggests AppLovin is no longer a secondary option; it is now competing head-to-head with the largest platforms in digital advertising.

Jefferies also highlighted the strength of AppLovin’s referral program, stating that, “This program brings in leads from brands that spend about $200 million annually on paid media.”

Such figures indicate that AppLovin is attracting advertisers with deep pockets and long-term budgets.

Lead Generation Emerges as a Strategic Shift

Jefferies’ analysis points to a major shift in AppLovin’s business model. He said, “The opportunity for lead generation advertisements could be about three times bigger than e-commerce for AppLovin Corporation.”

This shift away from app installs and gaming traffic toward lead-based advertising reflects a broader ambition. AppLovin is positioning itself as a full-stack marketing engine, capable of serving industries like finance, education, and retail. 

The company’s tools, particularly its demand-side platform, AppDiscovery, and ad optimization engine, AXON 2, are designed to deliver performance-based results, which advertisers increasingly demand.

Global Expansion Adds Depth to Revenue Strategy

While Tierra’s clients have not yet begun advertising internationally through AppLovin, Jefferies reports that “They plan to expand into international markets within the next 30 days. This could create additional revenue streams for the company.”

This expansion is timely. Mobile-first advertising is experiencing substantial growth in regions other than the U.S. Regions such as Latin America, Southeast Asia, Africa, and the Middle East are facing a boom.  

ApLovin has to strive to replicate its U.S. success abroad. If it is successful, it could present new advertising segments while reducing its dependency on the domestic markets. 

Financial Performance Validates Strategic Confidence

AppLovin’s second-quarter results for 2025 were surprising, with revenue $1.259 billion (vs. $1.219 billion expected). The adjusted EBITDA was $1.018 billion (vs. the expected $996 million), which is excellent. 

According to InvestingPro data, the company also has a 78.61% gross profit margin and a perfect Piotroski Score of 9. 

These metrics suggest strong operational efficiency and financial discipline. The stock is currently trading near its 52-week high of $657. This further reinforces investor confidence and trust.

Analyst Ratings Reflect Broad Optimism

Jefferies is not alone in its bullish stance. Oppenheimer has also named AppLovin a “Top Pick,” signaling broader institutional interest. Several other firms have raised their price targets, including”

• Benchmark: $640; citing “a new growth phase with self-serve capabilities and international expansion”
• BTIG: $664; highlighting “non-gaming revenue opportunities”
• Piper Sandler: $500; maintaining Overweight rating after a “solid beat” and “strong guide”
• Jefferies (earlier): $615, pointing to growth in e-commerce advertising
• Benchmark (initial): $525; reaffirming Buy rating post-earnings

Valuation Risks and Insider Activity Raise Questions

Despite the optimism, valuation concerns persist. It is estimated that AppLovin’s fair value is $119.29, suggesting a potential downside of over 75% from current levels. 

This gap between strong demand and fundamental valuation introduces risk. However, the most important sufferers of such risks are those long-term investors.

Additionally, recent insider selling, including over 1 million shares by executives, has surprised. While not uncommon in high-growth firms, such activity may signal caution from within the company’s leadership.

Jefferies Is Clearly Evolving To A Broader Advertiser

However, it is worth noting that with valuation risks, the company’s next move should be more strategic. Similarly, when executives or major shareholders sell, they should establish a clear roadmap for taking calculated steps. To maintain its position in the long run, the company must compete with giants like Google and Meta in the market. And of course, without sustaining advertising trust and global execution, the company would not be able to do it.